Underwater homeowners decline

Published: Tuesday, March 5, 2013 at 1:00 a.m.

Last Modified: Monday, March 4, 2013 at 8:44 p.m.

The number of Southwest Florida borrowers with negative equity in their homes slipped to the lowest level in two years during the fourth quarter, new data show. But the percentage of homeowners who owe more on a loan than their property is worth still greatly exceeds the national average.

Facts

SOUTHWEST FLORIDA:

Leading national average looks bad for foreclosures

The number of underwater properties also is greater than what is considered healthy in a real estate market, enhancing the threat of another uptick in foreclosures later this year, according to a report from Zillow.

Analysts attribute the recent equity improvement to steady price appreciations and the overwhelming amount of boom-year mortgages that have already gone into default. Most believe it will take several more years to fully work through the systemic issues caused by the nation's housing crash, which began in 2007.

"Because our market skyrocketed so high, then dropped off so fast, it will take a long time to catch up," said Scott Petersen, a real estate attorney in Sarasota. "If people can still make their payments, they can survive."

There were 44,716 borrowers in the Sarasota-Bradenton-Venice metropolitan area with negative equity in their homes from Oct. 1 to Dec. 31, the data show.

Though that still represents one-third of all outstanding mortgages in the region, it is the lowest figure since Zillow began tracking the numbers in early 2011.

Combined, underwater borrowers owe $3.5 billion more on mortgages than the current value of their properties, Zillow reported.

Like many areas hit by the Great Recession nationwide, that negative equity was largely the result of a home-value index that reached $156,200 in the fourth-quarter -- nearly 51 percent below the market's peak.

Additionally, 8,765 of those borrowers in Southwest Florida were behind on their payments for 90 days or more, for a delinquency rate of 19.6 percent. That figure ties Vero Beach as the seventh-highest rate in the nation, the report shows.

"It's going to take years for these people to ever reach a break-even point," said Jack McCabe, a real estate consultant in Deerfield Beach. "A lot of people who have been making their payments are going to give up, and that is going to amount to new foreclosure filings."

The 33.3 percent of Sarasota homes with negative equity trailed other major metro areas, however, including Tampa's 41.5 percent; Atlanta's 49.5 percent; and a whopping 59 percent among homeowners in Las Vegas.

The fourth-quarter U.S. average was 27.5 percent.

In response to the federal mortgage settlement, lenders in recent months have been increasingly willing to modify bad loans and reduce borrowers' principal.

But the lack of equity locally -- coupled with a woeful delinquency rate regionally -- have many industry watchers fearful that another wave of foreclosures will hit Southwest Florida's housing market later this year.

Marketwide, that phenomenon could threaten existing home sales by limiting new listings, at a time when inventory levels are stuck near 10-year lows.

"This is the primary reason we are seeing inventory as low as it is, and we will continue to see low inventory in the next couple of years," said Robert Goldman, a Realtor, attorney and developer in Venice. "There are just too many sellers who are not able recover enough to satisfy their loans."

<p>The number of Southwest Florida borrowers with negative equity in their homes slipped to the lowest level in two years during the fourth quarter, new data show. But the percentage of homeowners who owe more on a loan than their property is worth still greatly exceeds the national average.</p><p>The number of underwater properties also is greater than what is considered healthy in a real estate market, enhancing the threat of another uptick in foreclosures later this year, according to a report from Zillow.</p><p>Analysts attribute the recent equity improvement to steady price appreciations and the overwhelming amount of boom-year mortgages that have already gone into default. Most believe it will take several more years to fully work through the systemic issues caused by the nation's housing crash, which began in 2007.</p><p>"Because our market skyrocketed so high, then dropped off so fast, it will take a long time to catch up," said Scott Petersen, a real estate attorney in Sarasota. "If people can still make their payments, they can survive."</p><p>There were 44,716 borrowers in the Sarasota-Bradenton-Venice metropolitan area with negative equity in their homes from Oct. 1 to Dec. 31, the data show.</p><p>Though that still represents one-third of all outstanding mortgages in the region, it is the lowest figure since Zillow began tracking the numbers in early 2011.</p><p>Combined, underwater borrowers owe $3.5 billion more on mortgages than the current value of their properties, Zillow reported.</p><p>Like many areas hit by the Great Recession nationwide, that negative equity was largely the result of a home-value index that reached $156,200 in the fourth-quarter -- nearly 51 percent below the market's peak.</p><p>Additionally, 8,765 of those borrowers in Southwest Florida were behind on their payments for 90 days or more, for a delinquency rate of 19.6 percent. That figure ties Vero Beach as the seventh-highest rate in the nation, the report shows.</p><p>"It's going to take years for these people to ever reach a break-even point," said Jack McCabe, a real estate consultant in Deerfield Beach. "A lot of people who have been making their payments are going to give up, and that is going to amount to new foreclosure filings."</p><p>The 33.3 percent of Sarasota homes with negative equity trailed other major metro areas, however, including Tampa's 41.5 percent; Atlanta's 49.5 percent; and a whopping 59 percent among homeowners in Las Vegas.</p><p>The fourth-quarter U.S. average was 27.5 percent.</p><p>In response to the federal mortgage settlement, lenders in recent months have been increasingly willing to modify bad loans and reduce borrowers' principal.</p><p>But the lack of equity locally -- coupled with a woeful delinquency rate regionally -- have many industry watchers fearful that another wave of foreclosures will hit Southwest Florida's housing market later this year.</p><p>Marketwide, that phenomenon could threaten existing home sales by limiting new listings, at a time when inventory levels are stuck near 10-year lows.</p><p>"This is the primary reason we are seeing inventory as low as it is, and we will continue to see low inventory in the next couple of years," said Robert Goldman, a Realtor, attorney and developer in Venice. "There are just too many sellers who are not able recover enough to satisfy their loans."</p>